Berlin, are there no more urgent sustainability needs to serve in Europe than having Volkswagen recall 8.5m diesel cars?

Sir, Jeevan Vasagar and Chris Bryant report “Berlin forces VW into mandatory recall of up to 8.5m diesel cars across Europe” October 16. Why on earth would Berlin do a dumb thing like that?

What will that cost? Are there no more urgent needs to serve in Europe than recalling diesel cars?

Is it because the hurt inept emissions controllers who were cheated now want revenge? A lover’s spat?

How does the world benefit from forcing VW into mandatory recall of up to 8.5m diesel cars across Europe?

What will that cost? Is Europe really so buoyant that it can pay for an 8.5m diesel cars recall across Europe?

Is recalling these cars the most effective way to cut emissions that pollute, and to help the earth’s sustainability?

How much useful research could not be funded with what is to be wasted on the recall of 8.5m diesel cars?

Frankly if you want to punish Volkswagen without punishing other don’t recall cars give the diesel car owners, or other, some Volkswagen shares instead.

Sir, as a reminder, here is a previous letter on that.

@PerKurowski ©

If you stop banks from financing what’s perceived as risky, there will be no spark strong enough to ignite the economy.

Sir, I refer to Chris Bryant’s and Claire Jones’ “FT Big Read: Quantitative Easing: The printing press rolls… but spending lags” September 8.

I believe it refers to or quotes fourteen experts. And none of these experts mentions the credit risk weighted capital requirements for banks.

There is nothing so dangerous for our economies than the silly credit risk aversion that has been introduced by the Basel Committees’ regulations. Not only does it guarantee that sooner or later safe havens become dangerously overpopulated, it also denies, solely on the basis they are perceived as risky, the access to bank credit to those who could really move the economic frontiers, those who could provide the much needed strong spark that ignites an economy, like the SMEs and the entrepreneurs. The investment decisions by big corporations are of course important, but that’s not where the heart of economic growth lies.

On these regulations impeding the liquidity provided by QEs to reach where it can do the best, I have written at least a hundred letters to you over the last couple of years. For reasons that are inexplicable to me, you, and the experts, have preferred to look away.

ECB is currently in the hands of Mario Draghi, a former Chair of the Financial Stability Board, one who accepts taking huge risks with QEs and zero interest policies, but who finds it unacceptable for banks to lend out many small loans to those perceived as risky and prefers banks to take on huge exposures to what is perceived as safe. Sir, I ask, how far can our economies go with that kind of expertise?

Let me cite John Kenneth Galbraith’s “Money: Whence it came, where it went”. “If one is pretending to knowledge one does not have, one cannot ask for explanations to support possible objections”. Sir, is it not high time for FT to stop pretending and ask regulators to explain why for instance they set the capital banks should be required to hold against unexpected losses, based on the perceptions of expected credit losses already cleared for.

@PerKurowski

Current bank regulations can only produce old weak jobs, not new sturdy and strong jobs. That takes risk-taking.

Sir, Chris Bryant, in “Germany’s ‘jobwunder’ obscures full picture” September 3 reports that most job growth in Germany is made by “low paid, precarious types of employment Such as part-time work, temporary contracts, so called ‘minijobs’ and outsourcing”.

We should not be surprised. Bank regulations which allow banks to earn much higher risk-adjusted returns on equity when lending to “The Infallible”, than when lending to “The Risky”, can only produce fatty tissue, and not the muscles required to engineer a new generation of sturdy jobs… that requires risk-taking and does not allow for excessive risk-aversion.